HLI - Earnings call transcript Q3 2018

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Houlihan Lokey fiscal third quarter 2018 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. conference being this XX, today, that XXXX. note call recorded is January Please turn to call Lokey's will the I now over General Christopher Counsel. Houlihan Crain,

Christopher Crain

should www.hl.com third Thank access found release, on operator. And Lokey everyone. Investor be now, you, website, Relations Houlihan at hello, which can to the fiscal quarter everyone our the XXXX in earnings By have section.

anticipate, should differ therefore, subject to guarantees These could or to usually operating December results other future caution are Form quarter SEC. you future We today the forward-looking results review begin not SEC to actual words discussion materially will, remind We the are similar from discussion that phrases impact need statements, of statements that uncertainties relying to formal it These for refer XX-Q everyone cause our statements. we of including on investors ended for regulatory could of and encourage filings, XXXX are filed will by of remarks, a what our numerous them. interpreting we recent forward-looking our with such you more Before and the risks expect, we detailed to when is risks filings the and, include should all use identified which and XX, financial when the that condition. as performance. expect exercise our

we'll these our the or prepared not which a comparable financial Alley, measures opening to to accordance we in and believe release turn on company. financial Financial Scott. for financial hl.com considered in some non-GAAP During call our remarks be we Officer, They questions. reconciliation will GAAP. These then the is A in Houlihan of the measures, we call the directly I'll Chief performance. be discuss Executive Hosting With today's today, call Scott results earnings over open to as in of Beiser, with should provide will call, measures Lokey's investor and and that, Chief isolation substitute most the GAAP have company's Officer available Lindsey our evaluating can website. the measures presentation the useful

Scott Beiser

welcome Thank call. earnings to XXXX third everyone, fiscal year and quarter Hello, you, our Christopher.

We strong a earnings revenue growth. third-quarter are report pleased of to year-over-year and continuation results and

Our of year, that financial quarterly performance we the is in over level up strategic the executing year. We last highest history. the the $XXX Once increased respect million various over up all from quarter, last the initiatives share conditions. in for same to quarterly again, last when and With pursued of period the combined three quarter years, quarters the have revenues in several few year. $X.XX favorable this from the firm's their same were adjusted our last earnings last XX% on per earnings, our market revenues the quarter reported X% to business with result $X.XX, segments compared

For nine from the adjusted were last the XX, earnings first XX% share December $X.XX, up of fiscal year. XXXX, months $X.XX per months nine ended for

expenses quarter uncertain primarily The growth. income certainty improvement short-term tax This law the had US results important, the on of represents reform. compared we as tax the impact is tax from lower the was in and the record federal quarter the that for is and driven for other significantly firm. Our Since ended. an the XX% period taxes to this continued revenue individuals, strong in by profitability an decision-making portion to last same reduction to allowing improvement the an them of plan and was event greater reform environment a new and organizations rate earnings believe tax a tax during for in lower ability and Equally US-based, tax rate future result a performance year. our quarter during revenues as effective a major significant just

affected of we investment we this benefit and our and advisory financial quarter, Munro. will transaction Kingdom shareholders. the by firms, been our we effective employees in premier attracts in interest new and finance, successfully Subsequent positive activity. teams a for which believe throughout adding end work including United more or and early of rates XXth as bill boutique since closes, tax the in substantially and and economy consulting the When and Lokey they law investment Quayle signing over was directors, years. analytical towards deductibility XX other our Quayle our of hope year. bankers, has new The continues opportunities venture to of advise acquisition and Furthermore, eight disciplined While strategic acquisition future this for month, activity our restructuring increased consistently attitude strengthen the add corporate just with deal-related the this variety client acquisition into interest only data the banking financial law. growth of the the and experienced suggest new the In signed analytics, the managing marks the and that into business is base develop. ongoing could announced limitation joint will our opportunities increase law interest firms the valuation in Houlihan UK services the have indication London produce our over clients, headquartered firm Europe. The we by the engagements We our and Munro pipeline to expertise. premier the banking ancillary a bench a become acquisition our momentum associated has renewed should last industry recent nine from law one continues that of

of in Corporate less million closed number experienced generated engagements, for our Now what the over was three best ever, X% for second quarter the growth in Corporate although and than our we've last And the transactions, some year-over-year. growth we $XXX of comments about each several business segments. quarter, of years. revenues the Finance new up Finance recorded revenues

without the As we've quarter, our second half in momentum, earning of and the exceptionally expected and positive continue stated strong year second Finance, was first to previous fiscal the especially in this half calls, we that results Corporate occurred but second quarter than in the half. year. similar a dynamic this we third half usually This a the expect quarter and the in fiscal stronger first of seasonality in fourth

seen remain revenues quarter, business MD low our revenues and last market We the We transactions unusually mid-cap financial market Corporate that on periodically by focused relatively We the increase and restructuring have our period Finance of to supporting business. continues same for this our M&A M&A to share suggests Corporate revenues same The grow, believe revenue a year-to-date grow quarters. our units last business flat in continued versus Finance to backdrop. our million against reflecting that trend indicative Financial investment MDs per of than developing the year. capital and quarter the years. X% we in in that that Restructuring year-over-year. the $XX existing the more significantly which our Furthermore, markets doubled generated high same more can for be has year, success experienced is for continued tend period have several volatile than or last business year-to-date over exhibit up versus other we've business

revenues the we XXXX. see XXXX. momentum impact below of Short-term, particular, Year-to-date, the into in a new what much our last us. affected number which and more of this signed our said likely an we've in diversification currently gas of over significantly from fiscal that experienced related lower deal they and for restructuring for Having fiscal quarter's was couple less fee as heading oil up challenge large normal years, by continue couple away a in will that, of results year represent business of transactions. new positively flow engagements had quarter, revenues to a is result segment is on This business we

several including in interest services loans our year-over-year. tech Year-to-date, of intellectual business leveraged led positive has the however, as $XX Over code, portfolio rates, for the growth transaction the above as quarter, Services buildup property Advisory changes business, million multiples the for the new generated continued valuation by marketplace. revenues signs segment and intermediate and bonds up and and Financial of this restructuring our practice. advisory long-term, valuation a well in X% our tax been high-yield business, rising and we global US to average see

in We resulted strengthening of continue to our which disciplined to invest in services search in capabilities. existing offer we capabilities business, increased senior-level and banking has diversity in our in our adding for talent we new Firm-wide, FAS remain talents through development the clients.

and group, added we newly consumer government constituted our quarter, Three group in one services one gas in through our six industry practice. This added and were our oil MDs.

in Australian we Additionally, another banker our added business.

we believe I senior help mention particularly continues depth Since in of left which league which of MDs six table we were retirements are of proud. strength planned investment and improve. can't Overall, firm, the couple employee During most of departures. field, XXXX a banking we quarter, awards, the our and base to are but our the

as are $X year by that M&A advisor XXth under been row billion number Reuters. We again Thomson ranked US Lokey the the announce Houlihan all has pleased transactions one to in for once for a

of verticals that M&A restructuring industry the business number verticals. ranked the We're financial one by as the number advisor transactions our billion value $X several pleased Restructuring global to addition, In one ranked both Financial all of transactions as terms Thomson in announce in under were also our for of advisor respective was US and Reuters. number

Financial as In financial of the restructuring by addition, advisor IFR business named our year. Restructuring was the

are We're and to our believe believe Lindsey. and will and and complement that call an enter I'll the net the hires. positive employee continue about face that a we development about XXXX, And over we external tax with optimistic we of our business that clients acquisitions We for our to Munro our acquisition pending for that As that, business. to excellent Quayle firm. reform significant for turn opportunities are our be internal the exist excited climate

Lindsey Alley

were quarter transaction year our XX continued period you, on closed down $XXX compared positive to expectations, quarter. of Thank average revenues in X% with Finance, an only transactions closed Corporate the same the momentum XX million We Consistent in was prior-year. In third our increase the its fee transactions in Scott. for the from Finance Corporate quarter, last and slightly. the

experienced the Restructuring in follow quarter the However, has seasonality to from the in our an the transactions existed XX of Financial compared first exceptional the revenues were given not million year. the the increase performance that last period same the closed business XX Corporate We Finance for in half the transactions in X% in of year. past did quarter, quarter $XX prior-year. the

same year. However, closed significantly the on quarter our average higher deals was compared fee transaction last with

revenues driven growth in Services, to was we see year. to stream for and year, events and by Advisory oil steady-state for Revenue to quarter advisory with and a restructuring the were valuations, industry help January portfolio verticals, increase an quarter. the with million returning and advisory, from tech continue our acquired several IP the fee $XX revenue same gas relatively in X% of quarter, more broad-based product In transaction We prior-year. the from activity across new our a services revenue compared line last uptick growth which along last Financial

versus the expenses our to the compensation quarter. $XXX for in quarter in last increase for $XXX million period adjusted the due same revenues Turning million to expenses for was were The increase adjusted compensation primarily expenses, the year. third

our last we adjustment For with XX% year. and quarter were third expect the resulted vest issued for related quarter pre-IPO compensation to vesting adjusted last the April had an fiscal in adjustment we XXXX, continue of in to fiscal awarded of the for of tranche that million until ratio $XX an grants this connection third our with compared of quarter third This XX.X% IPO the in XXXX of XXXX. of grants

continue QX XXX QX, between and adjusted in this between our awarded that for of XXX year. compensation be lower and compensation fiscal basis We XX% pre-IPO adjusted we XX% to our grants is with and than target points consistent compensation basis experienced and adjusted ratio awarded GAAP QX should ratio the an This ratio. difference XXX points

of or last XX.X% year. versus XX.X% Our revenues third quarter quarter adjusted $XX of third the revenues the in $XX were or non-compensation in expenses million million

year we're of quarter, costs million a and that that with associated to affecting a our October a walking through fiscal This to $X.X quarter expected Therefore, fiscal items With a we bill, corporate reform quarters which rate, XX% spend average required are in year-end for to effective the few relate the now I one passed took tax for recently tax you would state rate number effective adjust and change occurs our effect effective XX.X%. through out quarter our and simply to Because XXXX tax in XX year-to-date primarily rate for March XX.X% XX% our tax through is federal respect account the are to third January XX, we we the registered XXXX. are rate at taxes, was minutes in the tax our like to up federal quarter, them. December rate fiscal the reporting that on including March three tax taxes Because company, adjusted of block there legal XX.X% in of and X, federal at trade, accounting XXXX. of adjusted true closed XXXX. which effective the are

adjusted XXXX, XX% of effective federal normalized our and expect effective XX% tax rate, this made which between rate respect non-recurring foreign related assets Next tax federal plus rate they XX%, quarter, be effective to XX% effective include includes tax in deferred one-time a fiscal we of on we and Beginning year our tax we liabilities tax tax and a to a the repatriation which to rate expect and rate our new see taxes. deemed the of to earnings. adjustments between including to XX.X% that on tax tax both adjusted remeasurement With state a XX%, effective based state rate is adjustments our taxes. plus quarter, the an reform,

current October and unvested whereby between of is of affected non-recurring vesting price Additionally, time our a grant. we rate the the that of the the related by the stock made our shares adjustment tax at acceleration to of positive the is difference in stock XXXX price

sheet quarter. the of and to balance for use Turning cash the

in XXXX, December had we as vesting XX, X.X block late approximately unrestricted we of to million shares tax and to million obligations. trade value employees the completed. and debt $XX our million. these As had income we we approximately of shares shares order And with of treated would satisfy equivalents accelerated registered $XXX In hold our in investment we and cash connection of The that of is October, XXX,XXX withholding securities. the

XXXX, addition, and were In bonuses that payment financial XXXX. deferred in in fiscal to deferred we November our earned staff year cash through made a

in of defer portion our each As that until May month we reminder, of a the bonuses year, a awarded cash November. are

Lastly, December. year With May this year-end, quarterly board be following our in tax our At XXXX. payable $X.XX fiscal announce in plans has year, quarterly our our of of declared operator, open light we a per regular our XX, reform. line March I'm regular board that questions. meeting discuss board the our dividend paid we to in shareholders dividend to And XXXX to dividend that, next the pleased to can share for of on fiscal for

Operator

question Thank first Sachs. you. [Operator Instructions]. with We'll from Conor our go Fitzgerald Goldman to

Your line is open.

Conor Fitzgerald

afternoon. Good

to pipeline typical with of dig to Finance a that deeper your you've dialogues interpret matching on we of Should ago? around reform. Just tax the say, just kind of Corporate over comments that some robust your that it may out having trying stronger not closing months, its little around dialogue as your next show was, three year clients than a more and the but post seasonality a comments not seen significantly the revenue

Scott Beiser

how more seen of close. I flow strong before business. closing some we months as seen characterize have half many could take will our very year of new said, the month activity we then, We January, in of we've And We've saw So, Finance. in always would you Corporate just is think activity throughout that in being first deal seasonality seen the new good. which, the an it acceleration whole

and into We of the the little. noise who whether maybe there a people say quarter. as tax we certain would third probably more time around I'd through but Nothing December tax unsure reform occurring go or for just significant, were the or reform think, more not some deals potential got little delayed it. period, an of were in do amount closing So, probably probably head a average-size

Conor Fitzgerald

any competed And Thanks. but et if helpful reform. a know competition impact of on of expense could your to some on away your pressure thoughts secondary expect you business upward like through it's color. increased tax deal cetera? benefit you just days, about very the compensation whether have then, longer-term, or, pricing, either kind That's do things on from early what be on I

Scott Beiser

evidence do early costs, having nothing up. way of most tax of which So, of change have think, people lot juncture a to are by to reform. driven same really, well I of And any this and the see almost or our going any other thing, factors, think, too retain one to some but another, I with is at we in don't terms ability hire with

Just certain in I to up. the But at improve, we the see travel to continuing we side that this cost see all like costs tax said, juncture of see as is we changes economy rent nothing with the really reform. costs, the go have do

Conor Fitzgerald

That's helpful. taking for questions. Thanks my

Scott Beiser

Conor. Thanks,

Operator

next from we'll Ken And J.P. go to Morgan. Worthington

Your line is open.

Kenneth Worthington

rate Good on sort comments. of the With tax here. we flow your use afternoon. falling, cash tax should your of following windfall up the about think of how Hi. I'm

guess, to follow-up what in you the in you pace are are, does the And follow-up to do this is, last questions guess, as you guess, therefore, maybe increase do own pace of think cash or been investing extra is, investment I the And you it? your always how the capital So, real pace there's about return doing investing impact you going about I Thanks. thinking if increase in use view flow of appropriate business, one shareholders? there? and, here an no of at are your investment the the have of business, then, to then, terms I

Scott Beiser

I love right. I questions. kind the It's All three-part of ask question.

for never And that to do in we've last I the in foreseeable acquisitions, and for at half themselves for think present appetite a and for we needed really will what not flow. would future, years cash the more opportunities anticipate as what we I will terms acquisitions our wanted cash juncture, to this dozen look do. to of business because have has they a I we the So, little our just continue think done things increase necessarily

what of I continue net true in think him be paid increased We've there thing only since and for not years. the meeting in been at terms to public would to income. roughly is our we what it board higher two to are ever we've people have is mentioned, with will board net cash hiring. what same as a something dividend a flow, business, added May. are what that been we've our take that and us we we annually we're Obviously, income, accelerate fiscal then, I public. We've determination continue with the of will up capital. think new, will base, influenced that our do because plan be other hire we good I'll where will the cash all And Lindsey holds next rate coming excess of that's call we our year-end sudden to on least, to do we have for at make have When we gets the will what go can tax And typical do that quarter. a at we when incremental needs, our it, look next dividend because think new our to reform and

Kenneth Worthington

changes opposed related? buyback the or most to on as is that Does seem deal Okay. side dividend the likely,

Scott Beiser

XX some of we'd and some period acquisitions, a of increases we as and used dividend, level well, beyond buyback how like that. at look we'd supplement terms do would stock. repurchase we'd and particular we'll address we and program what that we have would our further in the next said, what a do think months roughly last in did I time rolling whatever normal to I we close And pretty always board I we about wanted is capital new comes all We above then a we dividend at buyback. a in look announce that, in year probably back take to dividend do that did a beyond is or hopeful a always said for excess answer ago think And maintain we buy and share at then share So, meeting. at look we've a above

Kenneth Worthington

on is seem And that beneficial just more does M&A? middle-market than for thank there more of that. on active Okay, because either or you. reason of other then, less you. hear to to had a comparing side be you tax less be want tax M&A, what say to middle-market or to to parts M&A when M&A reform reform? the Just Thank large-scale Like, to

Scott Beiser

we buildup, participate in of don't the but and tax think help growth just that as the number for many of incremental there's on individuals the again, about they of the uncertainty year corporations think, finance might some said, have only industry, uncertainty we activity that of planning issues, takes profiles month's with have everything that least for about that's going we albeit think right certain of of that think flow reform, cash signed of be look And they already foreseeable with the now, or and clearly it's digest people have. we our positive uncertainty. do I others easier see we worth we they there corporate reform to and as and think as client of been that there what I or in at therefore, like. different the end and antitrust And people continue generally future negative hear and, one terms our would closer talking some increased cross-border actually and doing larger and that regard see getting which other the engagements it in now some activity, will to deals, don't tax deals calendar with would and but level has what people on other think M&A like that more up, there different may was been or are some and in once not And had do side. tax the I we talking and we towards be typical reform, got closer we

Kenneth Worthington

middle-market Okay. either M&A But faster of an Both M&A? improvement. grows will to parts that reason than slower or see think other no

Scott Beiser

nothing M&A can tax right you pertains larger would Yeah. middle-market it or reform. I to we that in as is that point don't. you're off suggest There better now being

Kenneth Worthington

awesome. Okay, Thank very much. you

Scott Beiser

Thanks, Ken.

Operator

And our Devin comes Securities. next question from JMP Ryan from

Your open. line is

Devin Ryan

thanks. Lindsey. Great, are guys? evening, Scott, you, Good How

Scott Beiser

Hey, Devin.

Devin Ryan

well. Maybe on restructuring. Doing one here

has business several $XXX the So, around the been years. in past million

to So, to calibrate are comment to probably about that we're you guess, seems calibrate there the which I'm kind of this I are at is just trough. would trying relative mean, trying It activity made operating any if And to reason a M&A trying level? that's assignments to like just forward that's $XXX above backdrop that mean, doing of maybe we being just the is between moment. down rolling was figure, change? there in of the I significantly. still in, more that kind that But surprising. that just million the view. we're that enough XXXX-XXXX somewhere we idiosyncratic I'm or that I you are in not outpace

Scott Beiser

what we from oil been not large this did gas noted last We quarters, and the particular close others did has that have did reasonably numbers feel restructuring minus probably or pushed for in of initially quarter were the I that plus think projects of oil in we years we benefited down. coming oil XXX troughed industry But our the describe, like to revenues commodity and revenues I several amount gas. We gas couple ago. happen especially and did area an have and your accurate. that and We are environment think would that and several note, the up.

were see but lower cycles. lower good quartile half that still default we've arguably diversified of the seen and what in industries, the the the rates continually different in across So, getting the –clearly some it's to business are different

not we're cycles. to expecting turns, peaked restructuring in we see revenues, that until very So, large like other

sometimes do just when can of said, bit that's close. they perspective deals we a we periods a that you, So, and I business, sometimes much the has two as and through new in environment. do in we noted of think see business a weaker than some the bringing might or previous more about the lot or being year quarter two. amount over sizable business where we've been last in this of in seen and the of last less volatility you're new go quarters And a give And like it's little just business signed business new we've that a amount up

Devin Ryan

it. Got

color. some focus the Caught That's the bullish been maybe helpful And that then, know are comment. Okay. business. I Thank one there's you. expectations and markets on capital And pretty longer-term. there

And been that trying just then, so few in some all, of, that much more a bit kind it's much think – Just we to business where if how little doing, to or a to gave get of general sense. years, grow. you if of at a better can sense could you get since contributing kind be how today, it's revenues continues

Lindsey Alley

Yeah, Devin.

more that as long-term, excited are business, that I growth markets, the M&A traditional have extremely in the think past. certainly business. medium or than and much our Capital about, we believe we the have mentioned and over

have I think not business. of a yet. is tell us to there conversation at terms or size, intending revenues even just think enough or in the point, a really not large impact about the announce to this I we're disclose you, corporate capital the revenues finance the portion we're just to but it, revenues will markets our for that it But relative of makeup I

Devin Ryan

it. Got

here. just And last a that. one appreciate quick And Okay. then,

X.X where essentially and I at shares should I to tied making just just the an So, to the It pre-IPO assumption accelerated those if doesn't ratio sound stock in be vesting should trying want make changed the I at change the awards. sure, million of are all. like or guidance the around amortization comp think to all. those about

Lindsey Alley

need the going So, a in to the grants, that essentially, the significant some think accelerated for that eventually, It we two did in quarter basically to. portion shares I vesting for quarter acceleration. include new accelerated, offset in the but of of shares you're the year pre-IPO We, don't amount And, that the issued it. quarters. corresponding wasn't way which to a was because business, we manage of we October,

result, little as And likely for and issuance. no share to our for QX, quarterly you're a likely so, little purposes shares vesting part of our or new regular as issued to stock accrual see or see no you're

standpoint, go. we mirror our offset in quarter, occurred issuance. the because issuance So, doubling they result in the an essentially vesting. share quarter And third third a we as accrual the it the our as it from share all the expectation of two compensation then, of share accelerated And of

Scott Beiser

Devin, shares have payout beyond think full ratio the XXXX not year we roughly business would we at for so did we vested quarters, we our up by all accelerate fiscal the our has accelerated impact year, by the months. fiscal on end anything of no just moved that it that or and about effectively, it otherwise is did fiscal this and our how we effectively six particular two year

Devin Ryan

clarification. it, okay. Thanks, Got That's Yeah. guys. helpful

Scott Beiser

Thanks.

Operator

of Michael our next caller Needham from we'll America Lynch. Merrill And Bank take

is line open. Your

Michael Needham

guys. for taking Hey, Thanks the questions.

to want on growth inorganic I So, like touch just opportunities.

the to Quayle, through Quayle kind then, advantages And deals you did regularly. get the for You good those, Can platform opportunity set part Houlihan? for broadly, doing Munro. today? a and then, to lift is you them the you join being like just And particularly the guys firms guys of what of how of more offer have done recently acquisitions, these Bluestone and go deals pretty team

Scott Beiser

product do keep M&A. want may line to if of need may a along to or hedge do, coverage the may different to feel department, have So, go scale going accounting for, or growing, a but, benefits we're equity may standalone hit to looking get IT get ultimately, And restructuring with reasons need might to might I have have to do, they they is multiple organizations larger may that compliance They deals not size their a or a can't or deals, whatever complex that don't they for private be they global and part we the they or to organization. deal to point, have the to that. different, develop they a that they're that they fund we not wall, not products FAS the think be, they each and

So, that's the a motivating lot reasons. of

from companies than being we'll do be able perceive, joining better I to that ultimately, these at starts really separate. think by as it the collectively bankers forces we do

to the throughout I the into standpoint, at of that's you Houlihan do particular we cetera, hirings, think, we've acquisitions. of set because we Lokey bunch think peers, both our us from some can mix, of all buy Houlihan or Lokey. a when and with do find debating, the or more or regards Lokey deploy internal And and look internal versus we hire in of benefits individuals it's them do to think or product I either see to to with private develop three, other Houlihan people and our as done it deals them align want some we joining diversification them? they for or And hire or of So, as sense always et of lines Houlihan well industry do, industry Lokey some we we've peers. our And public a development, that makes them geographical years, do some acquire we and/or the really, product or size funds a we group want

we a and get announce so, does receptiveness really I those continue good And since continue we inquiries we and job acquisitions with done, and we're think, being more inbound think talking people. when to to deals help, public since with we've

– we've and that's an grow years to to why the been last continue help we the us will mean, able have do be over it I would business. think so or important for tool expect So, I to eight as

Michael Needham

provide thing for Houlihan? noticed, I balance one their And think, Munro, from I do capital or did sheet. growth selectively, you they thanks. something, to will Quayle that at continue Okay, Is though,

Lindsey Alley

do capital for and amount it a Quayle think part. then raising do business. shop, if capital, are I M&A is raising, Munro, of some and meaningful they any call their not may that's growth are, They like traditional but we they insignificant growth it a they capital may an much

Michael Needham

assuming only company, happens the from ORIX. changes then, I over a the might sell, was stake got but the company? one Okay, next know just if Thanks. any guys it. couple when And other expect years, you it don't know standpoint in governance the they the they reduce of just would you for

Scott Beiser

percentage all our It's amount I None – certain ORIX those they spelled to ownership way the of They a the documents back, changed. to things continue rights. downward. if of lines had they do in a think, years continue drop conditions entitled ownership owns membership. along set they in their board before going When had move dropped veto our have And IPO. and certain they're few two-and-a-half out percentage, those terms of ago right a as shares, and certain to have certain would governance forth their

Michael Needham

guys. Thanks, Okay.

Scott Beiser

Michael. Thanks,

Lindsey Alley

Michael. Thanks,

Operator

we from UBS. next, Brennan have And Hawken

is open. line Your

Brennan Hawken

question. guys. Hey, the taking Thanks for

up started that Thanks. just quarters progressed? or help maybe falling is rolls that the flinching the on replaced. spoke activity these to I just like in since quick know off, dynamic, results? you the been restructuring. to regularly it what's that the the could can we've it quarters attractiveness. long-term the of following got seems intermediate So, be down have surprise better-than-expected be slow you Feels what's spoke understand you certainly to chunkiness that helpful. would of mandates fact it first understand us the – us slowdown through thinking if quarterly last nature to the gas the But just and signal that few been that one, left a you oil business, over oil this it's to you there of caused a going Maybe And business in are as as Is help you work gas. and to

Scott Beiser

don't deals things. you described, really know or Yeah, another. say in might volatility what is as or I there you Brennan, close one will chunkiness and some, quarter three

a So, that. little you'll of get

process the at engagement signed getting a and hired business I amount you're basis. letters a that of nature verbal of have think true the kind then amount certain certain a of tends the starting also moment of on the to

if into never those, turn engagements away actually will fall or of you they an some know just so, of And engagement. and into them actually will some turn not

revenues and couple might, of harder you previous we place, the nature have the of but to a work that this albeit if that sometimes – will business. thing one times only hires and and we've and with will it's just or that's a last move Ultimately, the edges we is third book were if Restructuring but footnoted with this pools And and those, Restructuring around we and So, But predict in in on hires sizable a our projects, happened financials. written half, a verbal get on had around be versus in this staff in a And it's might, on the the Finance, bonus that Corporate theory, to by to were quarter, half by they project that we in couple worked it year, sizable had in of in on worked first jointly Corporate booked and booked Corporate our you jointly, little projects had our we it we quarter Finance. to likewise, happen Restructuring. our projects both Corporate Finance staff. Restructuring Finance jointly

worse sometimes our peers, at some together, business better, get core we have and who the than, just slight it. a ourselves, an revenues a together. we business, them of book are refinancing and way others. to because and M&A come other the revenues, sometimes can to both do, variations with restructuring little to the report But some the restructuring just corporate in maybe up you it's there the a Lazard by M&A, is restructuring And do versus of you kind segments, them of little one finance and else segment at a we than looking of or look least lumps everybody what unlike is, component try but sometimes we distinctly So, some think, I assignment doing

you three I'd same But maybe at describe activity been business be pace keep of what is kind just So, of for last term. good over those that year, the the restructuring. and short kind least results at at is to very said we're the saw doesn't suggest in the new we've we've would what going reasons that year-and-a-half,

Brennan Hawken

of previous turning that, tax and I basically taking sustained business decades Appreciate think law and we up when materially, code want expect case there it tax all finance restructuring That's be that, for corporate to work this that around helpful. or changes And, relating even your as guess, people about and Scott. just optimized new change – buy make folks rather businesses of they're the then look a only in following that of not am too cooperation out on with your firms I'd having fair? that would as and going pickup their optimistic you fully here? Is more new And to see you order the more type code. in then or pursue bit much I get Or Are wait but mean a for around does to to deals that already, a forward? starting just engagement? sure reaching to

Scott Beiser

Well, we'd say two things.

quarters, industries really be to because It can unchanged. tax new I'm not code or of for beyond I products or you're as an until geographies a our I and advisor, about people not banker, more skill an take suggest, clients would just activity this it even potential years, between – we sets. of sure is think just and changed to there's the And mixing we the think does may matching whether all best talking in all and for it lawyer, is to accountant, interaction and shakeout. try better reform. cooperation tax that I and of say all

I out we think sets really have together. successfully do firm, own their or that from going better tend client. other to that with they do subdiscipline. the always I can it think help if skills when within when whether comes the suggests they don't skill to need to business how groups multiple something We'll that. they else. parts And think of for caused they disciplines they're And the put need do that their we it little opportunity by matter down it's it figure to and do It tax doesn't will together, reform

Brennan Hawken

from a our comes with Thanks lot. question enough. next Fair Ann And KBW. Dai

line Your open. is

Ann Dai

afternoon. Hi, thanks. Good

of a I for pretty to have higher-level just guess, bit question today. guys. the feels So, M&A for one me, you environment I good

top the to in to point top much meaningfully more if at from nature? here cycle? very in wondering, concerns is how had valuations, from market that potential characterize are it clients what with And taxes this your holding or else? is in and Or from M&A, engaging And then, have you much the so, there secular your those I'm anything back improve shifted view, factors really their are

Scott Beiser

are don't left be you more example reform the the make, has change, should a they trying they think cross-border, business, think or but reform. And ownership it sense not, C best of corp. they capital a alignments does the make right kinds industry, the one game, configuration, getting give what new we'd legs two certain a is we feel M&A their whether are to prior was this think might value tax little like were of in and expenditures kind that know, more than there is Was I inning to tax there determine new they is the of whether helped pass-through. that's innings, to game at or the baseball that's that juncture whether if longer. or everybody I this activity extended it's into

And time minds it foreseeable out through people for it's going will perceive people best strategy, I sort of continue future. to in is what weeks to opportunities it than like people's talking they the ago. So, interested going this about are were for think but stuff and the more some they all as feels today take six

Ann Dai

Thanks. Okay, that's it for me.

Scott Beiser

Thanks, Ann.

Operator

to we'll Autonomous. go Vincent Hung from And next

line is open. Your

Vincent Hung

Hi.

a Europe what those talk cetera. done in years with you've deals in about few you've Can with just So, et recent progress McQueen, Leonardo, made acquisitions? you

Lindsey Alley

Yeah.

in one consumer. acquisition. to presence in geographical Leonardo, been within McQueen That extremely great we a presence It's global really which time little successful a vertical respect and we're an respect offer us. truly acquisition a was now a of we've accomplished Leonardo acquisition verticals one what food with with for has industry largest to of different. with a the With our industry an acquisition more respect I in integrated. We fully bit was taking pleased think had us. to them the and US where at McQueen an with

had Increased Leonardo, beefed our Germany. so, in into We beefed And with in our we up We presence Italy. had We presence presence up none. And Netherlands. none. increased presence the Spain. into

Munro to it do about if is with think you if Leonardo. two with the we've you benefit geographic geography, expansion done a all groups standpoint, we've And to Quayle added add industry best our of want is groups. got what that geographic feed that to significant way from that should the really, so, industry And we

Leonardo think them base Quayle the next significant creating and allowing countries should really made, the expertise. serve help additional provides the Munro that very sell really step. And groups was to industry because I the is Leonardo base first So, industry our respective their industry was step to we've And step since bankers group we've made it it transaction. and penetration countries in well in those knowledge respective the

Vincent Hung

the around giving engagements also, lifeline? maybe on weakness the due it. levels? on of would companies is a of XXXX side say restructuring, the part engagement is now to maybe types reform, Got XXXX, you of And new tax back level And

Lindsey Alley

and than time to in one is definitely Hard engagements another like past. more – to It's just the exactly business. compare signed to today's there And reform have companies of may may cash there's restructuring tax global marketplace back in verbals, I To sizes. that. on some needed probably it now contracts said, a a different all we've you had of flexibility two question, of some It's that not. the sides and some for extent, flow provided and Yeah.

starting EBIT that On then the at we've level And as the and eventually already kind of hand, interest interest level. with just the increases seen. deductibility, the combined rates EBITDA important, in change other the in

interest but think, The say further I'd those they we coupling the financial have. distress increases, certain that most increasing rate. increases could companies, are factors, might for modest of expecting in economists far, So start

loans long-term. some So, out And run will into eventually leveraged I there, look size high-yield we said, softness see think is of always distress. and of that some absolute it short there will it. a term, We've we – with the out I marketplace seen big it or debt like component some when midterm couple you the

Vincent Hung

to they the your far, any in the of full discussions finance so capital note, such CapEx a and deals On lower or expensing measures the have led companies or deductibility that really just Got related how tax tax it. the lastly, has loss? as reform superseded so rethinking interest M&A rate in

Scott Beiser

more give don't would capital in people are to are And people and a capital-intensive answer have with least enough data seen some seen the doing question client which just what relevant of leaning. equipped also far. think input probably expenditures. lot you points base I same our larger some with more transactions that so level be it's a on which businesses, at others type There'd than cases, to way some for the comments Haven't who that question mid-cap are probably better maybe we've more be of of

Vincent Hung

thanks. it, Got

Scott Beiser

Thanks, Vincent.

Operator

from question Jeffery Sandler [Operator Harte Instructions]. our with O'Neill. We'll go to next

Jeffery Harte

of what's How whether guys. quarter. on than be going seems forward? One, it the that dollar through better non-comp, just that expecting after amounts most Hey, little growth should versus ratio at a comes the I'm in we least questions. likely to be, I'm quarter or thinking about outlook-wise, it's even

Lindsey Alley

Yeah.

kind number. we XX% think I around have XX% provided of that to long-term guidance

in we this think a the of anticipation I would XX%. bit still imagine, it, we're comfortable XX% long-term with call talked about to of and guidance as you little

But we that business term, that move, a this rent this expense. technological the significantly business where of we're period requires in significant certainly short that have may more in for performing require do – significant and pieces And large I than time. is better think continue is a that investment. some usually a

that. I anticipation at much we're now, operating XX% like And But, XX%. better to right to that, again, we keep in so, would think of it than

We to long XX% target run. expect to like strong performance to the XX% category continue that over in maintain that good would that and we'd at

Jeffery Harte

at back And while. pick But deals a that. finally, of of acceleration kind some room thanks. Okay, a big deal six, least after the eight eventually seems we up there deals recent pause tell? hard along. picking historically, what then we're last up Or of of cycles, again, of to and deals overall middle-market counts kind kind kind We've weeks? the seen given for too we've just large Is seeing the for of being of kind counts acceleration and it's wake activity big another follow deal decent of seen as look it now, a in

Lindsey Alley

the the could Yeah. you market, terms history, terms of the back it lag quarters. in market if in middle performance in of Usually, larger in quarters, look and measured of lags

think And reason tax that M&A gains given by again, a seen the cap of two be to no – there's large market, So, may I no we've there's market with the reform sometimes wouldn't middle-market positive it. M&A and what a is surprised a indications been there of to But and environment. X%, given down even it's reason flat middle-market may large-cap that very the certainly that up I, but strength certainly, see not believe some kind two. versus the if believe and we might again, be quarter or flattish take early up

volatile, So, react, but it much the slower to much generally follows trend. less

Jeffery Harte

Okay, thank you.

Operator

time. this at questions further no have we And

Beiser over remarks. back it turn to closing Scott to like I'd So, for

Scott Beiser

thank for forward fourth when I XXXX want in to you our fiscal to all results the quarter third on everyone our in look we spring. call. discuss updating participating progress for our And we quarter

Operator

your for call And Thank participation. concludes our you today. that for

disconnect. may You now

Houlihan Lokey (HLI) 29 Jan 182018 Q3 Earnings call transcript